It’s sad to see the downfall of yet another once-thriving clothing retailer – this time online fast fashion company Missguided which has now appointed administrators. This takes me back to a situation I found myself in as an employee of a somewhat beleaguered manufacturing company a few (or so) years ago.
“I’d like you to go through this list of your major accounts who are just over our 30 day standard terms – pick out the most appropriate contacts you have and persuade them to pay their invoice by the end of the week”. This was the instruction given by the company financial controller to a much younger 'me' and the rest of the key account managers. Although I didn’t want to admit it (I had only recently joined the company and had relocated), I knew that this was the beginning of the end – and it turned out I was right – because it did get worse and the company in question went into administration.
You see, our business was owned by a venture capitalist which had bought into the concept of a medium sized ‘agile’ business that would be first to market with innovative new products people would need. Sadly, for a variety of reasons, we weren’t structured or organised internally in such a way that promoted the agile approach required.
From a negotiating perspective, we talk a lot about information disclosure and the need to structure expectations – I’m sure (back to the manufacturing company), when the clients received a call from the key account manager asking for an invoice payment when it was only just overdue, it rang major alarm bells. In a similar vein, I’m sure comparable feelings of dread were felt by Missguided’s suppliers. In the absence of any rationale for not paying its bills, proposed credit extensions or discount requests; it became the equivalent of showing everybody Missguided had the ‘black spot’ (or any other kind of incurable contagion). As a consequence, invariably suppliers who could, would run a mile to distance themselves.
Missguided’s quoted mission statement is to ‘Empower females globally to be confident in themselves and be who they want to be’. A laudable overarching objective which I’m sure was originally underpinned by a number of financial and non-financial goals.
When market dynamics change for whatever reason (in this case, sustainability, cost of living, pre-owned, retro chic etc.), we need to revisit our original plan and check to make sure that it is still viable. Often the primary objectives remain the same; it’s the strategy (how we pursue the lower-level goals) that needs to be changed. The same is true for any negotiation planning – be tough on your objectives, but flexible on the means (strategy) by which you achieve them.
With competitors allegedly performing better, cheaper and faster in the same fast fashion space and with this particular market segment shrinking for the aforementioned reasons, there are only two options available: 1. Outperform your competitors in at least two out of three things (better, cheaper, faster) in the current segment or 2. Diversify into one of the new up and coming areas of the market.
We can’t plan for every eventuality when we negotiate, but we can reassess our planning in the light of new information (from the other side or the market). Failure to be agile and adaptable when the need arises means that you may be the one asking for discounts, extensions and ‘good will’ without a plausible story to back this up if requested! We sincerely hope this fate never comes your way, but if it does – don't be surprised if you watch your business contacts run fast in the opposite direction!
Sam Macbeth, 31st May 2022
If you'd like to receive occasional email updates with useful actionable insights into commercial conflict resolution and negotiation, sign up here.